Don Nelson will be named the new coach of the Golden State Warriors this week after the Warriors agreed to terms on a buyout with Mike Montgomery, ESPN.com has learned.

Don Nelson's Coaching Record
Team Years W-L Playoffs
Milwaukee 1976-87 540-344 42-46
Took over for Larry Costello in '76-77 ... Coach of the Year in 1983, '85 .. One of era's best teams but unable to get past Celtics and Sixers to NBA Finals.
Golden State 1988-95 277-260 9-15
Coach of the Year in 1992, when Warriors won 59 games but lost in first round of playoffs ... succeeded by Bob Lanier in '94-95 after 14-31 start.
New York 1995-96 34-25 0-0
Succeeded by Jeff Van Gundy after 59 games.
Dallas 1998-2005 339-251 19-24
Turned Mavericks' fortunes around, but old playoff frustrations returned ... Left shortly before end of '04-05 season, succeeded by Avery Johnson.
Overall: 27 years 1,190-880 70-85
Sources close to the situation told ESPN.com that things are "all lined up" for Nelson, 66, to rejoin the Warriors, who haven't been to the playoffs since 1994 ... when Nelson was still coaching them.

The Warriors announced Tuesday morning that they have bought out the final two seasons left on Montgomery's contract, worth an estimated $5 million. The club declined to discuss their interest in Nelson, but have scheduled a news conference for Wednesday night to formally announce his appointment.

ESPN.com reported in February that Nelson was privately dropping hints to friends about a willingness to coach again in 2006-07 after taking the 2005-06 season off. With Avery Johnson ready to succeed him faster than anticipated, Nelson relinquished his coaching duties with the Dallas Mavericks in March 2005 after a series of health issues and his relationship with Mavs owner Mark Cuban deteriorating.

A mended relationship with Warriors owner Chris Cohan was likewise required for Nelson to come back to the Bay Area. The Warriors were 50-32 in Nelson's last full season in 1993-94, which was also Chris Webber's rookie season, but a personality conflict between coach and player ultimately led to Webber's trade to Washington early in the '94-95 season and Nelson's departure soon after. Nelson was later sued by Cohan for $1.6 million and the case was not resolved until 1999, when an NBA arbitrator ruled that Nelson could keep the funds Cohan sought in repayment after Nelson was hired to coach the New York Knicks for the 1995-96 season.

The past, sources say, has been sufficiently buried to clear the way for Nelson's return. That's largely because of Nelson's two-decade kinship with Warriors vice president Chris Mullin, who has been quietly pursuing Nelson's return for weeks.

Mullin announced in mid-April that Montgomery's job was not in danger. Yet after back-to-back seasons of 34-48, amid leaguewide rumblings that Montgomery never had strong command in the locker room after jumping to the NBA straight from Stanford and almost no change to the roster, Golden State's need for fresh coaching ideas was obvious, even though Montgomery was the eighth coach Cohan had hired since Nelson's departure.

Warriors players have been bracing for a shakeup all summer after the league's longest playoff drought was stretched to 12 seasons, but reserve guard Derek Fisher is the only rotation regular who has been dealt so far. After a failed free-agent pursuit of swingman Al Harrington, it appears that Golden State's only big move will be the rehiring of the second-winningest coach in NBA history.

But it still counts as a whopper, given Nelson's resume and history with the club. Nelson has never taken a team to the NBA Finals -- and Johnson got the Mavs there in his first full season -- but is still regarded as a master game coach. After losing a whopping 14 games last season by three points or less, Golden State is hoping that Nelson can finally eradicate the Warriors' losing culture.

Nelson, a three-time NBA coach of the year, has won 1,190 games in a career that also includes stops in Milwaukee, New York and Dallas, where he won 339 games and led the Mavericks' revitalization from 1998 until March 2005.

Mullin, an All-Star alumnus of Nelson's Run TMC teams that also featured Tim Hardaway and Mitch Richmond, knows as well as anyone what Nelson is capable of. The increasing reliance on smaller lineups and faster tempos around the league should only play to Nelson's strengths.

Nelson has been employed by the Mavs as a consultant since his coaching retirement and remains under contract to the club for the next five seasons at an estimated $250,000 annually. But Nelson's contract, according to team sources, allowed him to start entertaining head coaching offers at season's end.

The Mavs haven't asked much of Nelson in his new role, even though he was still paid his coaching salary of $5 million last season. That enabled Nelson to spend what often refers to as the "year of my life," opening a new bar in Dallas and traveling extensively with wife Joy, a fellow cancer survivor.

With his batteries apparently recharged, Nelson will now attempt to resurrect a team with whom he won the last of his three NBA Coach of Year awards in 1992. He'll bring the Warriors to Dallas in the first week of the NBA season, matching up with Johnson on Nov. 6.

Marc Stein is the senior NBA writer for ESPN.com. The Associated Press contributed to this story.